241

Assistant Professor
University of Rijeka
Faculty of Economics
E-mail: dario.maradin@efri.hr

COMPARATIVE ANALYSIS OF CONVENTIONAL

AND ISLAMIC BANKING:

1. INTRODUCTION
Banks whose primary goal is to maximize profits represent the most

significant financial institutions in most countries. Unlike this fact which refers to

conventional banks (hereafter CBs), Islamic banks (hereafter IBs) are trying to be

socially responsible while operating in accordance with religious principles,

prohibiting the use of interest and following the model of profit and loss sharing with

their clients. Despite its relatively short history compared to CBs, IBs and Islamic

finance in general represent one of the fastest growing financial industries.

The financial crisis of 2007-2008 had a global impact on banking

institutions; therefore this research focuses on the effect of the financial crisis on CBs

and IBs’ financial stability and efficiency, with a special emphasis on the importance

of regulation in the banking sector, which is also described by Jean Tirole, an

economist and a Nobel Prize winner. It is becoming clear that bank regulatory

measures should be in alliance with banking principles conditioned by economic,

institutional and cultural environment.

Development of Conventional Banks:

The first precursors of banks can be

traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407
The first precursors of banks can be traced back to ancient times (the Middle
East, Greece, Rome), with the emergence of exchange of goods in the areas rich in
natural resources. In the period from 3400 to 3200 BC in the Middle East, the
appearance of banks was related to religious beliefs, thus the temples were bank
founders. After Hammurabi’s Code on the Banks from 2500 BC, the banking changes
from a religious to a commercial activity, it is taken out of the temples and the real
banking industry begins. Still, the banks as we know themdevelop only with the
emergence of money. The first beginnings of banking similar to modern conventional
banking were seen in Italy, in the region of Lombardy, while Casa di San Giorgio in
Genoa is considered the first bank and was established in 1407

The first precursors of banks can be

traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407.
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407.
EKON. MISAO I PRAKSA DBK. GOD XXVI. (2017.) BR. 1.
(241-263) Lj. Cerović et al:
COMPARATIVE...
243
older than Islamic, analyzing their
intense development, it is noticeable that
conventional banking has a kind of
historical advantage of about 500 years
The first precursors of banks can be traced back to ancient times (the Middle
East, Greece, Rome), with the emergence of exchange of goods in the areas rich in
natural resources. In the period from 3400 to 3200 BC in the Middle East, the
appearance of banks was related to religious beliefs, thus the temples were bank
founders. After Hammurabi’s Code on the Banks from 2500 BC, the banking changes
from a religious to a commercial activity, it is taken out of the temples and the real
banking industry begins. Still, the banks as we know themdevelop only with the
emergence of money. The first beginnings of banking similar to modern conventional
banking were seen in Italy, in the region of Lombardy, while Casa di San Giorgio in
Genoa is considered the first bank and was established in 1407.
The development of banking through history was largely influenced by the
growing human needs in the fields of production and trade. The increasing
concentration of capital in production and trade resulted in an increasing
concentration of capital in banking. Various economic and political conditions led to
new processes in banking as we know it today, so the period between the 19th century
and the 1st World War is characterized by the process of concentration of banks. The
period between the 1st and the 2nd World War is characterized by bank specialization,
whereas the development of modern banking is seen through the process of
globalization.According to Nikolić and Pečarić (2007, p. 198), this globalization
process initiated de-specialization of banking operations whose goal is to create a
bank as a universal financial institution which offers all services. The de-
specialization process is a precondition for their survival in the globalized financial
market and a way to fight off stiff competition from non-bank institutions

Development of Islamic Banks:

The establishment of the first interest-free bank in Egypt in 1963 is
considered the official beginning of Islamic banking (Ahmad, 2014, p. 158; Hadžić,
2005, p. 18). In 1974, the Organization of Islamic Countries (OIC) founded an IB
called Islamic Development Bank (IDB), whose goal was to promote economic
development in Muslim countries and providing the funds for the development in
accordance with the rules of Sharia2. By the end of 1970s, several banking systems
were founded in the Muslim world; first private commercial bank in Dubai in 1975, in
Sudan (FaisalIslamicBank ofSudan) in 1977 and in Bahrain (Bahrain Islamic bank) in
1979 (Institute of Islamic Banking and Insurance, The Islamic Banker).
Today the world counts over 300 IBs in more than 70 countries, and except
in Muslim countries they can be found in the following parts of the world: Australia,
the Bahamas, Denmark, France, Ireland, Luxembourg, Germany, the USA,
Switzerland, the UK, as well as Albania and Bosnia and Herzegovina, the only
Southeast Europe countries in which there arebanks that operate on Islamic financial
principles (Hadžić, 2005, p. 25).
It should be noted that in Muslim countries today there are dual banking
systems, i. e. the systems that comprise of both CB and IB. The example of the first
country with a dual banking system is the United Arab Emirates, where the bank was
established in Dubai in 1973 (Dubai Islamic Bank), that resembled the conventional
commercial bank in the way it operated, but without paying and receiving interests
(El Massah and Al-Sayed, 2015, p. 69).
BASIC CHARACTERISTICS, SIMILARITIES AND
DIFFERENCES BETWEEN ISLAMIC AND
CONVENTIONAL BANKING SYSTEM:
The origins of Islam and its prophet Muhammad laid a foundation for the
Islamic financial system. It is built on religious principles and laws (Sharia) which
imply that trade is allowed by Allah, who prohibits usury and the existence of
interests (riba) as a safe, predetermined and fixed income. Therefore, Islamic banking
is based on an agreement between the bank and its clients about profit and loss
Sharing.
In Islamic banking, money represents potential capital until it is invested and
united with human work through business activities of production, trade and services
based on moral, ethical and religious principles (Čočić, 2012, p. 215).
According to Hadžić (2005, p. 51), Islamic ideology defines (criticizes)
lending of the money at an interest rate as a way for the rich (those who have the
capital) to make profit without giving anything in return for the income (interest) they
receive. This Islamic approach to interest resembles the approach of ancient
philosophers (Aristotle) and classical economists (Adam Smith)4. Islamic teachings
indicate that interest discourages people from production and mutual exchange of
manufactured goods. If the interest is forbidden, it is considered that individuals
borrow to each other with pleasure and thus do good deeds not only to others, but to
themselves as well. According to Islam, the interest slows down the process of
investment, and consequently, economic and overall social development. In Islamic
banking, the risk is shared between the bank and the capital user.The bank is directly
interested in the success of a client and participates actively in managing a future
company. With such a utilization of funds, it can generate greater profits than from
interest income;nevertheless, risk exposure is higher.
Imam and Kpodar (2010, p. 4) argue that, along with the prohibition of
interest (riba), operations of an IB should abide by other restrictions of Islamic law as
well:

 the prohibition of activities that generate asymmetric information, hence

encouraging excessive uncertainty, i. e. financial uncertainty (gharar),

 the prohibition of speculative activities (maysir),

 the prohibition of activities that negatively impact the society (haram).

Considering those religious principles by which IBs operate, western
analysts were skeptical about the establishment of first IBs, as they believed the
absence of interest in the banking system would disable bank operations, arguing that
interest-free banking implies (Iqbal and Mirakhor, 2009, p. 16):

 unlimited demand for available funds and the lack of supply,

 the lack of savings,

 unrealized investments and growth,

 the failure of monetary policy, because no instrument of liquidity

management could exist without a fixed, predetermined interest rate, and

 one-way “escape” of capital

CONVENTIONAL AND ISLAMIC BANKS BEFORE,

DURING AND AFTER THE FINANCIAL CRISIS:
Following, the paper brings an overview of CBs and IBs’ operations from
the perspective of their financial stability and efficiency. Then, in the context of the
analysis of market power in the banking sector, it explains the relationship between
the regulation and the financial crisis in the banking sector, and considers the impact
of regulation on CBs and IBs’ operations.

Operations of Conventional and Islamic Banks:

Today, when there are numerous financing resources, which limits the
competition between banks, Islamic banking is one of the fastest growing industries in
the world. In the report by Ernst &Young (2012) on the competitiveness of Islamic
banking in the world, the assets of IB in 2011 were estimated at $1.3 trillion and it
recorded growth despite the financial crisis. During this period, in the Islamic
countries, IBs recorded 50% faster growth than CBs. According to data from 2014,
Abedifar et al. (2015, p. 2) state that the assets of Islamic finance are estimated at $2
trillion, 80% of which belongs to IBs (or Islamic windows). In the period from 2009
to 2013, IBs’ assets grew at a rate of 17.6%, andby 2018 the expected growth rateis
19.7% (The Economist, 2014).

Financial Stability of Conventional and Islamic Banks:

As many authors agree, defining financial stability is not easy (Gadanecz
and Jayram, 2009, p. 365), taking into account the complex nature offinancial systems
and the existence of complex connectionsbetween different sectors. No clear
consensus exists on how to define financial stability, how to assess it or what policy
measures to apply for its realization (Kakes et al., 2004, p. 4). Lai (2002, p. 1) defines
financial stability as the ability of a financial system to resist a crisis for a given shock
to the system. Houben et al. (2004, p. 11) and Schinasi (2004, p. 8, 10) see financial
stability as the ability of a financial system to facilitate an efficient allocation of
economic resources and the effectiveness of economic processes, such as wealth
accumulation, economic growth, and ultimately social prosperity, to manage financial
risks and to perform these functions, even when the system is affected by external
shocks. In order to protect the financial system and ensure financial stability, Lai
argues (2002) that it is necessary to remove the sources of instability (sources of risk
and vulnerability) by reducing likelihood of financial crisis and to mitigate the costs
of the crisis when they occur, and that all relevant parties (financial institutions and
authorities) should be introduced with risks. According to the European Central Bank
(ECB), the first line of defense against financial crisis consists of banks, insurance
companies and other financial institutions. It is their duty to remain liquid and solvent,
to check the creditworthiness of borrowers and in that way manage the risks they
undertake. The second line of defense is made of measures taken by public authorities
to mitigate the financial crisis. This leads to the conclusion that bank stability is a
segment of financial stability, and given the significance of banks as financial
institutions, the concept of banking stability is often identified with financial stability.
Münür et al. (2008, p. 10) point out that banking stability is the most important
segment of financial stability. Schwartz (1987) claims that financial stability cannot
be achieved without banking stability, and also that financial crisis occurs when
banking stability is threatened.Furthermore, Barth et al. (2001, p. 3) state that a stable
banking system is an important component of a stable financial system. With the
identification of the concepts of financial and banking stability in definitions, the
notions of financial and banking crisis are often used, since the stability implies the
absence of a crisis.

CONCLUSION
Unlike CBs, whose goal is to maximize profit and whose basic
operations are related to the granting of loans, receiving loans and interventions
in the payment system, IBs’ operations are based on Islamic laws, which strictly
prohibit the use of interest. Due to this characteristic of Islamic banking, many
were skeptical about the establishment of first Islamic banks, arguing that
interest-free banking is not sustainable. Despite the skepticism, Islamic banking is
one of the fastest growing financial industries at the global level. Interest-free
banking does not imply banking without profit, but a stable and secure ethical
business alternative.
The regulation of financial markets and financial institutions, banks in
particular, is an important precondition for financial stability and efficiency of the
sector. Moreover, reduced regulation, deregulation or self-regulation is one of the
main causes of the recent global economic crisis, as confirmed by Jean Tirole, the
Nobel Prize winner for his analysis of market power and market regulation. The
criticism of inadequate regulation and the responsibility of it in the recent crisis is
in a way a criticism of liberalism and the liberal theory of Adam Smith, who
opposed state intervention and advocated a regulator known as the “invisible
hand” of the market. In any case, in response to the crisis, regulation again
becomes an imperative of market organization, especially in the banking sector.

Islamic Modes of Financing

Islamic financing is a transformation of Lending into Asset Based Financing, within the ambit of
Shariah compliant business contracts, called Islamic Modes of Financing. The Islamic banking
institutions first take ownership of the goods, which are being sold or rented. According to a
well-known principle of Islamic jurisprudence, “One cannot earn profit from his capital or asset,
unless he has have taken risk, or liability of ownership of that capital or asset”. Contrary to that,
conventional banks earn interest by lending money. There are three main categories of Islamic
financial instruments or Islamic modes of finance:

 Debt Based or Trade Based products; such as, Mudarabah, Musawamah, Salam, and
Istisna.

 Equity Based products; such as, Musharakah, and Mudarabah.

 Semi debt based; that is, Ijarah.

TYPES OF ISLAMIC MODES OF FINANCING:

Given below is an overview of some major Islamic Modes of Financing:
MUDARABAH CONTRACT:
An Islamic financial instrument, in which one party participates with money and the another
with efforts. The profit shall be divided in strict proportion, and no party shall be entitled to a
predetermined amount of return. Financial losses shall be borne solely by the investor.
MURABAHAH CONTRACT:
Murabahah refers to sale of goods and margin of profit is included in the sale price of goods.
Subject of sale must exist, owned by seller and in his physical or constructive possession. So,
the seller assumes the risks of ownership. Murabahah requires an offer and acceptance, which
must include: Certainty of Price, Place of Delivery; and Date when Price will be paid.
IJARAH CONTRACT:
It generally means lease or rent, and it is a very popular Islamic mode of finance. Ijarah is selling
of the benefit of use or service, for a fixed price or wage. The bank makes available an asset or
equipment, such as plant, office automation, or motor vehicle, for a fixed period and rent. The
corpus of leased commodity remains in the ownership of the lessor, and only its usufruct is
transferred to the lessee.
MUSHARAKAH CONTRACT:
Musharakah is a business contract established by partners, who agree to share business profits
and losses. Profits are distributed in the proportion mutually agreed in the contract. If one or
more partners choose to become non-working partners, the ratio of their profit cannot exceed
their ratio in the capital investment.
SALAM CONTRACT:
Salam is an Islamic mode of financing, where the seller undertakes to supply specific goods at
future date, in consideration of a price fully paid in advance, at the time the contract. If full
amount is not paid, it will be tantamount to a sale of debt against debt, which is Haram.
ISTISNA CONTRACT:
According to this mode of finance, buyer places an order to manufacture, assemble or construct
something at an agreed price, and to be delivered at a future date. Commodity must be known
and specified, such as its kind, type, quality and quantity. Price must also be fixed in absolute
and unambiguous terms, and it can be paid in lump sum or in installments, as mutually agreed
The first precursors of banks can be
traced back to ancient times (the Middle
East, Greece, Rome), with the
emergence of exchange of goods in the
areas rich in
natural resources. In the period from
3400 to 3200 BC in the Middle East, the
appearance of banks was related to
religious beliefs, thus the temples were
bank
founders. After Hammurabi’s Code on
the Banks from 2500 BC, the banking
changes
from a religious to a commercial
activity, it is taken out of the temples
and the real
banking industry begins. Still, the banks
as we know themdevelop only with the
emergence of money. The first
beginnings of banking similar to modern
conventional
banking were seen in Italy, in the region
of Lombardy, while Casa di San
Giorgio in
Genoa is considered the first bank and
was established in 1407